ThyssenKrupp Stahl AG has sold its 49% of the GalvaSud joint venture to the Brazilian company Companhia Siderúrgica Nacional (CSN).

CSN submitted the higher bid in an auction organized and recently held by the New York law firm Cleary Gottlieb, Steem & Hamilton. Transfer of the shares is to take place after the payment modalities are dealt with.

Executive Board Chairman Dr. Karl-Ulrich Köhler gave as reasons for the withdrawal the uncertainties concerning the auto industry in Brazil and the Mercosur region. He said it was questionable when the Mercosur region would return to a sustainable growth track. After expanding rapidly in the nineties, the Brazilian auto industry built up large capacities, which have not been fully utilized for the past three years. The steel industry also increased its capacities.

Disagreements between the GalvaSud partners emerged last fall. Dr. Köhler said: “Our trust was destroyed by the long row over the deposing of the company’s chief executive, who had been contractually appointed by us and was doing an excellent job. Also, the breach of the agreement on starting material supplies by CSN drove GalvaSud to the brink of non-profitability. Sustainable positive results were no longer guaranteed.”

ThyssenKrupp Stahl will concentrate in the future on expanding its downstream operations in the growth market China, supplying international auto manufacturers there with high-quality carbon steel flat products. China is the world’s fourth largest automobile producer, making 3.9 million vehicles a year. Experts believe this will increase by 12% per year to reach 6.9 million in 2008. Last year ThyssenKrupp Stahl began operation of a tailored blank production line in Wuhan and the TAGAL hot dip coating line.

GalvaSud SA, Rio de Janeiro, was formed in 1998 at an investment cost of US$250 million. Its 350,000 tonnes per year hot dip galvanizing line, 160,000 tonnes per year steel service center and 8,000 tonnes per year tailored blank line began operation in early 2001.

ThyssenKrupp Stahl AG is the lead company for carbon steel in the Steel segment of the ThyssenKrupp Group. In fiscal 2002/2003 it produced 13.6 million tonnes of crude steel and generated sales of €7.2 billion. Including subsidiaries, ThyssenKrupp Stahl employs over 29,000 people.